I am very excited to announce a couple big changes to my overall trading strategy. When I began constructing my very first trading system, I designed it so that it did not require a lot of attention. 99% of the time I would either be waiting patiently for a valid setup or already sitting in a profitable trade. The most work I had to do was enter/exit the positions and log the trades. It gave me the ability to live my life without having to constantly keep my eyes on the position because essentially, everything was already set in place. It aims to capture large moves in stocks/indexes/commodities using the weekly for trend identification and the daily for entries/exits. In my last post, I mentioned the trading rules for that system, which require me to do nothing when there is nothing to do! Which I am perfectly ok with, because that is what makes the system profitable. As you can tell in the volatile markets as of late, a system like that does not generate signals. So I have had time to just sit around and watch the markets all day. Markets are fractal and after studying short-term price movements, I have found most of my signals work pretty well on lower time frames too. obviously the biggest difference is the pace of the trading environment which is not be underestimated.

In my boredom, I decided it was time to try something new. I already had constructed a system that is for the most part hands off. Therefore, I started looking into more short-term trading strategies that would require me to be more hands on. So now I am in the process of finding a new short-term trading strategy using these lower timeframes. I will be testing some of these strategies using live trades with small position sizes just because I do not really believe in paper trading. That being said, I am ok with paying some tuition to Mr. Market as I formulate these strategies.

The first simple strategy I am considering is almost the foundation of market structure in volatile markets. Volatility compression which is followed by a volatility breakout. Bollinger bands do an excellent job of showing this. Watch as the bands pinch during the compression. When the market breaks out the bands open up and the market quickly moves into a new range.


Another possible strategy is RSI divergences.


Another thing I came across was a trading strategy called ichimoku. It looks extremely busy but it is actually pretty simple after you know what to look for. I will have to do much more research and become more familiar with ichimoku before I risk real capital.


Incorporating these new strategies means that I have a lot of new mistakes to make and learn from. I am prepared to log all of my trades and find out which ones have the best edge in the market. One thing I know for sure, no matter what strategy I decide to trade I will be cutting my losses short, letting my winners run and controlling my risk. The rest will eventually fall into place!

Changes to my trading system